“While interest rate risk is real, a new set of international rules that will confuse efforts to manage it and make it even harder for banks to serve their customers is not the answer. We’re disappointed that the Basel Committee is once again proposing an overly prescriptive approach to address an issue on which banks and their regulators have already been working.

“U.S. banks have highly granular knowledge of their customers’ behavior that they already share with banking regulators and know how to manage their own institution’s unique approach to interest rate risk better than the technicians across the sea. They should not be shoehorned into a global, one-size-fits-all approach that fits no one well and risks disrupting ongoing programs to prepare for higher interest rates. We’re also surprised and alarmed that the proposal, advertised as applying to large international banks, would also reach out to small banks that operate far from Basel, Switzerland.

“While a complex matter, interest rate risk can and should be managed, much like regulatory safeguards that apply to other risk types. Rather than the Basel Committee’s heavy-handed and prescriptive global framework, U.S. regulators should continue to take a supervisory approach that allows local regulators to consider each bank’s specific positions and sensitivities.

“We plan to raise our concerns about the accuracy of the Basel Committee’s assumptions and how they are out of line with the regulatory program in the U.S. We recognize the challenges of interest rate risk, but we also affirm the ability of U.S. regulators to address it without new dictates from Basel.”

(Source - ABA News Release)

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